Fed to bailout AIG
In return for the funds, the federal government will receive a 79.9% stake in the company.
The company with 1.1 trillion in assets and 74 million clients in 130 countries will still likely be liquidated eventually, but in gradual less chaotic fashion.
"[A] disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said in a statement.
The move, however, did little to calm Wall Street with Dow down so far about 348 points.
CNNMoney.com - 56 minutes ago
Government response reaches dramatic new level: US will take 80% stake in nation's largest insurer to prevent global financial chaos.
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